The primary purpose of this blog (Prithviraj Kothari - MD, RSBL | Bullion market blog) is to educate the masses of the current happenings in the Bullion world.
This blog contains my opinion, which is not to be construed as investment advices.
Information provided in these blogs is intended solely for informative purposes and is obtained from sources believed to be reliable

Monday, 19 September 2016

Recently gold has been
struggling to climb up due to the recurrent changes in the expectations of an
interest rate hike. There is quite a possibility that market players are paying
too much heed to the whole interest rate scenario and in turn missing on the bigger
picture.

Nonetheless, Gold continues to work lower
alongside the rest of precious metals – a resilient dollar and rising US real
rates have prompted traders to unwind their long positioning. Investors have become
increasingly edgy ahead of the conclusion of the Fed and the BoJ meetings

Spot gold
was last at $1,314.66-1,315.00 per ounce, down $1.17 from Thursday’s close.

The spot
gold price had tumbled to a week’s low of $1,307.75 on Thursday on selling
pressures following a brief spike to $1,328.10 sparked by weak US retail sales
data.

In data
released Thursday-

US retail
sales in August undershot at -0.3 percent

Core retail
sales in August undershot at -0.1 percent.

Industrial
production month-over-month in August also disappointed at -0.4 percent

The US PPI
in August was unchanged; a 0.1-percent gain from the previous month has been expected.

The core PPI
– excluding food and energy costs – was in line at 0.1 percent.

The Empire
State manufacturing stood at -2.0 missed the expected -0.9

The Philly
Fed manufacturing index at 12.8 beat the predicted 1.1.

Capacity
utilization rate in August stood at 75.5 percent, a touch below the 75.8
percent

Weekly
unemployment claims for September 1-8 in at 260,000 were just below the
forecast 262,000 and, more importantly, the psychological 300,000 mark.

Lastly, the
current account balance in June was in line with consensus at -$120 billion.
Business inventories month-over-month was unchanged in July, missing the 0.1
percent forecast.

There was disappointment
in the markets when the data was released that showed signs of a softening US
economy,.aThe US economy has recently shown signs of softening – data including
retail
sales, its PPI and industrial
production have undershot.

While
disappointing numbers have lowered the likelihood of an imminent Fed rate
increase - for September was just 12 percent, November was 19.3 percent and
December was 46.2 percent. Earlier this week, majority had expected a rate hike
in December.

With such
soft data coming in from the US, expectations have largely diminished towards
the Fed doing anything in September and the market is drifting back towards the
view they might do nothing for quite a while.

Some even
feel that markets are overeating to a potential rate hike and giving too much
attention to it, thus ignoring other crucial factors that have the potential to
influence gold prices.

The market
is once again divided between the supported of bulls and bears for gold. The
ones that are bullish are not worried about gold’s recent downtrend. What is the most important factor for investors is
that the gains seen so far are sustainable and that gold has more or less
stabilised before it takes that long jump to rally.

They believe Fresh disappointing US data has
reinforced our view that the Fed should remain on hold in September, resulting
in renewed weakness in the dollar and US real rates and prompting fresh buying
in gold.Moreover, demand
for gold from China and India is expected to rise over the months to come which
will further boost gold prices higher. The market ismoving towards to a festive season and this
period of the year has generally seen demand for gold rising and this rise in
demand will make up for the weakness gold has faced over 2016.

Given that
gold is heavily influenced by fluctuations in the dollar and US real rates, we
are not surprised by the metal continuing to weaken. But the bullish supporters
for gold also believe that this weakness is temporary and is currently driven
by a stronger dollar and higher US real rates

Our
big-picture outlook remains bullish but more profit-taking could easily be
triggered if the price action disappoints, as it may be starting to do.

The primary purpose of this article by Mr. Prithviraj Kothari is to
educate the masses of the current happenings in the Bullion world.

Saturday, 19 December 2015

Gold showed wave like movements this
week. Beginning with a positive tick on Monday, then lowering by the middle of
the week and again picking up pace on Friday, it seemed like a see saw trend
for gold.

Though gold was up on Monday, it continued
to remain under pressure from a Federal Reserve policy meeting that was due on
15-16 December weeks, when the US central bank was expected to raise interest
rates for the first time in nearly a decade. In its last policy meeting of the
year on December 15-16, the Fed was seen raising rates by a quarter of a
percentage point.

Gold has already slid 9 percent for
the year, its third straight annual decline, in anticipation of a rate hike.

Gold dipped on Thursday morning in the US, with the start of US monetary policy
normalization spurring the dollar.

The Federal Open Market Committee
(FOMC) decided to start to normalize US monetary policy after seven years of
near-zero interest rates, lifting the federal funds rate to 0.5 percent
from 0.25 percent. The policy board still sees the long-run rate at 3.5 percent
and finishing next year around 1.375 percent.

After markets halted to examine the
impact of the rise, the dollar gained against other major currencies and
pressured the precious metals lower – the greenback was last 0.7 percent
stronger at 1.0844 against the euro.

Post the FOMC meet, gold was
expected to come under increased downside pressure from a stronger dollar.

Investors will now focus on the pace
of future rate rises, which will be affected by the general strength of the
economy and underlying inflation data.

In US data, weekly unemployment
claims for were in line with forecasts at 271,000 and were below the
psychologically important 300,000 mark.

The Philly Fed manufacturing index
for December at -5.9 missed the predicted 2.1 while the current account for
September at -$124 billion was largely as expected.

While the Fed does not expect to reach
its inflation target of two percent until 2018, Chairwoman Janet Yellen said in
the following press conference that current transitory factors stem from low
oil prices.

After Thursdays decline, the markers
expected gold to drop further. But Gold prices jumped in morning trades
Friday after the dollar weakened against other currencies and as investors
bought back oversold position after prices slumped to over four-month low on Thursday.

Gold prices finally found some support in the weakening
dollar index following profit booking and buying at lower level. Prices of the
bullion were down as dollar index weakened against other currencies, boosting
investors' appetite for dollar-denominated commodities.

Gold was in positive territory on
Friday morning in London after the dollar eased slightly amid growing
expectations that the path to higher interest rates in the US will be a slow
one.

The spot gold price was last at
$1,054.9/1,055.2 per ounce, up $2.20 on Thursday’s close. Trade has ranged from
$1,051.2 to $1,058.1 so far. In the previous session, the yellow metal dipped
below $1,050.

Gold (and silver) rose on Friday, taking back about half of Thursday’s loss
of approximately 2.00%.

Reasons behind the price rise were-

The anxiety in equities restricting from the despair in crude prices

A changed deliberation of a
longer-term view that gold is “due” to rise because of weakening dollar strength

Hurry to grasp snips.

In the coming days and weeks, the
downside in precious metal prices may be limited due to low activity as a
result of Christmas and New Year, volatility is expected to remain calm. But
the year could start on a negative note for gold. Chairwoman Janet Yellen said
future rate increases will be gradual and the policy could be reversed if the
US economy begins to slow

In the interim, volumes are expected
to shrink while market participants head to the sidelines during the holiday
period, possibly resulting in choppy conditions.

The primary purpose of this blog by
Prithviraj Kothari - MD, RSBL, is to educate the masses of the current happenings
in the Bullion world.

Sunday, 13 December 2015

Following
a 3 year trend, gold is once again on a decline, losing 9.8 percent of its
value this year.

Gold, which touched a five-year low last week, was little changed during the
start of the week, Prices fell on Thursday as a stronger dollar reduced the
appeal of the metal as an alternative asset.

Gold futures remained lower on
Thursday, after data showed the number of people who filed for unemployment
assistance in the U.S. rose to the highest level in five months last week, but
remained in territory usually associated with a firming labor market.

The U.S. Department of Labor Said the
number of individuals filing for initial jobless benefits increased by 13,000
last week to 282,000. Analysts expected jobless claims to hold steady at
269,000 last week.

The dollar index, which measures the
greenback’s strength against a trade weighted basket of six major currencies,
was up 0.4% to 97.72. Dollar priced commodities become more expensive to
investors holding other currencies when the greenback gains.

On Wednesday, gold eased up $1.20,
or 0.11%, in familiar trading range, as market players braced for the first
U.S. rate hike since 2006 next week. While investors widely expect the Federal
Reserve to raise interest rates at its December 15-16 meeting, they anticipate
the pace of increases to be gradual amid concerns over tepid growth overseas
and divergent monetary policies between the U.S. and other nations.

Gold
declined further on Friday and was headed for the seventh weekly drop in eight
weeks as investors positioned for a looming U.S. rate hike.

If
the Fed raises rates, gold will witness immense volatility. A robust dollar was
limiting interest in gold. The greenback rose for a second session on Friday,
extending a rebound from a one-month low on expectations of a rate hike.

A
higher dollar makes greenback-denominated gold more expensive for holders of
other currencies. Weakness in oil was
also hurting bullion. A slide in oil could trigger fears of deflation, a
bearish factor for gold, which is often used as a hedge against oil-led
inflation.

A
strong U.S. nonfarm payrolls report last week cemented expectations of a rate
hike at the Federal Reserve’s policy meeting on Dec. 15-16.

Traders have been restrained to stride
into the market before the Federal Open Market Committee (FOMC) convenes next
Tuesday and Wednesday.

Gold has witnessed obstinate gusts,
as dollar, real rates; commodity prices and volatility have all not motivated
investors to increase their exposure to the yellow metal.

The approaching Fed rate hike, has
been one of the most influential factors that has put a block in the price rise
of gold. And if any such hike is announced then gold prices might fall to $950
in the near future.

Recently hawkish Fed member
statements have essentially turned the meeting into a guaranteed launch of the
US policy normalization.

Industry watchers are largely
expecting the US Federal Reserve to lift its federal fund rate next week for
the first time in almost a decade after positive US payrolls data in the recent
months.

The
first hike in nearly a decade is expected to dent demand for gold, a
non-interest paying asset.

Gold is going nowhere as investors expect trading within tight ranges
before next week’s Federal Reserve meeting, where policy makers are forecast to
raise interest rates for the first time since 2006.

Traders are expecting that borrowing costs will be increased at the Federal
Open Market Committee gathering on Dec. 15-16, a decision that would dank the appeal
of bullion because it doesn’t pay interest. Gold has swung between gains and
losses the last two weeks as Fed Chair Janet Yellen, along with Fed Bank of St.
Louis President James Bullard, have said the pace of tightening will be
gradual.

Now the market waits impatiently for the Fed with one week to go.

The primary purpose of this blog by
Prithviraj Kothari - MD, RSBL, is to educate the masses of the current happenings
in the Bullion world.

Monday, 9 November 2015

The
downtrend in gold continues, with the metal charting its seventh straight
session loss and expectations for the same trend continue for the coming week.

The
gold price was steady on Friday morning, making time ahead of the much-awaited
US non-farm payrolls data, set for release later in the day.

Gold
was confined to a narrow trading range, before the release of the monthly US
jobs report.

Once
the report was out, gold prices plummeted
as the market continued its recent downtrend.

Gold
fell below $1,100 on Friday after US jobs data surprised with the upside,
raising the chance that the Federal Reserve will increase interest rates by the
end of the year.

Spot
gold was last at $1,087.40/1,087.60 per ounce, down $17 on Thursday’s close. At
its intraday low of $1,085.40, it was at its cheapest since August 7.

After the
U.S. labor market revealed its fastest pace of job gains this year, gold, on
Friday, witnessed its lowest level since early August.

Treasuries
tumbled and the dollar strengthened, as the report alleviated concerns of a
hiring slowdown after weaker payroll advances cooled in August and September.
Such improvement means a go-ahead signal for the Fed officials, who last month
held out the possibility of a December rate increase.

Since
this report was considered as one of the key influential factors for a rate
hike, let’s have a detailed look at the highlights:

The US economy added 271,000 jobs in October, while the unemployment
rate fell to 5.0 percent

The government
revised the September jobs gain down to 137,000 from the previously reported
142,000

The August gain
was revised up to 153,000 from 136,000. Over the prior 12 months, employment
growth had averaged 230,000 per month

Meanwhile, the unemployment rate dipped to a seven-year low of 5.0%
in October, from the 5.1% level of the previous month

Consensus
expectations compiled by various news organizations called for non-farm
payrolls to rise by between 177,000 and 190,000 in October, while the unemployment
rate was expected to hold at 5.1%.

In October,
average hourly earnings for all employees on private non-farm payrolls rose by
9 cents to $25.20. The average workweek for all employees on private nonfarm
payrolls remained at 34.5 hours in October.

The Labor
Department said job gains occurred in professional and business services,
health care, retail trade, food services and drinking places, and construction
sectors.

Employment
in professional and business services increased by 78,000 in October, while
healthcare added 45,000 jobs and retail trade added 44,000.

Employment
in mining continued to trend downwards in October with a 5,000 decline. The
industry has shed 109,000 jobs since reaching a recent employment peak in
December 2014, the government said

The civilian
labor force participation rate was unchanged at 62.4% in October, following a
decline of 0.2 percentage point in September, the Labor Department said. The number
of persons employed part-time for economic reasons (sometimes referred to as
involuntary part-time workers) edged down by 269,000 to 5.8 million in October,
the government added.

The
271,000 gain in payrolls was the biggest this year and exceeded all estimates
in a Bloomberg survey of economists, a Labor Department report showed Friday.

The key highlight
of the report was the non-farm payrolls number. It jumped 271,000 in October,
far more than the 183,000 consensus expectations and was a clear negative for
gold prices.

A
better-than-expected payroll and hourly earnings number caused the dollar index
to spike, which further pushed the gold prices down.

The surprisingly
strong U.S. payrolls has had a big impact on FOMC rate hike expectations,
sparking a new rally phase for the U.S. dollar against many currencies,
including gold.

The
marketplace deemed the report as positive and has prompted strong selling in the
gold market, as investors do not see a 2015 rate hike as far-fetched.

Federal
Reserve chairwoman Janet Yellen has stated that 4.9 percent is the Fed’s
estimation for full employment and reiterated before the report that she would
prefer to raise rates by December.

Earlier
this week, Yellen said a December rate hike was a “live possibility” and the
policy-board would raise the federal funds rate if the data was sufficient.

This
has intensified the speculation for a December rate rise and has pressured gold
prices lower, with the shift in safe-haven buying probably adding further
downside.

The
Fed hasn’t lifted interest rates since 2006, but dovish members see low
inflation as sufficient reasoning to hold-off until 2016.

Traders watch the monthly U.S. jobs report most closely as
they try to gauge whether the Federal Open Market Committee might hike U.S.
interest rates yet this year. One more jobs report, for November, is scheduled
for release before policy-makers meet again in mid-December, which will once
again be a crucial factor for raising interest rates in 2015.

The primary purpose of this blog by
Prithviraj Kothari - MD, RSBL, is to educate the masses of the current happenings
in the Bullion world.